Fuel margins lower Murphy USA net income

Lower retail fuel margins dented revenue and profits for Murphy USA, but the first quarter was still a strong one for the El Dorado-based convenience store operator.

Murphy USA reported Tuesday (May 2) first quarter net income of $106.3 million on revenue of $5.077 billion compared to net income of $152.4 million on revenue of $5.118 billion one year ago.

Diluted earnings per share were $4.80 versus $6.08 a year ago.

Total fuel contribution, which is calculated by retail fuel margin plus product supply and wholesale results, for the first quarter was 28.9 cpg (cents per gallon) compared to 34.0 cpg in the first quarter of 2022.

“Murphy USA performance was exceptional during the first quarter, delivering results aligned with our high expectations and future value creation potential,” said President and CEO Andrew Clyde.

“All-in fuel margins of 28.9 cents per gallon support our view of structurally higher industry margins, and were complemented by continued volume growth and share gains. Strong fuel performance and robust customer traffic drove meaningful year-over-year growth inside the stores, translating to strong merchandise performance. With new investments underway to help better serve our customers and grow future earnings, we believe the next five years of high-return organic growth, strong fundamentals and resulting free cash flow make a compelling case for continued share repurchase, as evidenced by our announcement of a new up to $1.5 billion authorization following the completion of our $1 billion program, which we expect to finish in 2023.”

Other key highlights for the quarter included:

• Total retail gallons increased 4.9% in Q1 2023 compared to Q1 2022, while volumes on a same store sales basis increased 1.4%.
• Merchandise contribution dollars for Q1 2023 increased 6.5% to $187.1 million on average unit margins of 19.4%, compared to the prior-year quarter contribution dollars of $175.7 million on unit margins of 19.7%.
• During Q1 2023, the company repurchased approximately 48,800 common shares for $13.7 million at an average price of $279.67 per share.

Murphy USA’s board of directors authorized a new share repurchase program of up to $1.5 billion to begin upon the completion of the current $1 billion authorization and to be executed by December 31, 2028.

Shares of Murphy USA (NYSE: MUSA) closed trading on Tuesday at $276.14. The company’s stock has traded between $217.39 and $323.00 over the past 52 weeks.

Murphy USA reported 1,720 stores as of March 31, 2023.